When two or more family members work together in a company that at least one of them owns, it is a family-owned company.

 


 
 
  This honor is shared by two widely divergent family businesses:

The oldest family-owned business currently operating in the U.S. is Zildjian Cymbal Company in Norwell, Massachusetts. This company was founded in Constantinople in 1623 by an alchemist named Avedis Zildjian I. The family and business moved to the US in 1929 and today, 13 generations later, the company is run by Craigie Zildjian and her sister, Debbie.

The oldest family-owned business that originated and is still operating in the US is the Shirley Plantation in Charles City, Virginia. The plantation was acquired by Edward Hill in 1638 and operated as a grain and tobacco farm until 1952 when it was converted into a historical site. It is currently managed by members of the 11th generation of the Hill/Carter families.



  By current estimates, between 80-90% of all the businesses in our country are family-owned or controlled. Despite the popular perception that family businesses are small "mom-and-pop shops", the ranks include many well-known giants, including Wal-Mart, Ford Motor Company, Mars Candy, Levi Strauss, Hewlett Packard. Even IBM began as a family-owned business. According to recent statistics*, family businesses accounted for over 64% of Gross National Product and 62% of total employment. So it should come as no surprise that family-owned businesses pay a full 65% of all wages and create 78% of all new jobs.

* www.FFI.org



  Unfortunately, this is a story of decreasing percentages. Only 12% of family businesses survive into the third generation and going into the fourth generation, the numbers decrease to a scant 3%. While this disheartening trend is still the norm for family-owned businesses, it does not have to continue.



  There is rarely a single, clearly identifiable cause for the failure of any business. The downfall usually comes from a combination of factors such as inadequate capital, increased competition, or changes in the business environment. Family-owned businesses must contend with the same problems, with the additional complexities of family relationships piled on top. Listed below are some of the more common challenges that family businesses face:

Inadequate estate planning stemming from…
  • An inability to face mortality
  • Incomplete legal documents
  • Uncoordinated legal, financial and family planning
  • The idea that fair means equal
Leadership transition problems relating to…
  • Failure to choose a successor
  • Inadequate training of successors
  • Gender and age prejudice
  • Lack of vision
  • Difference in values between generations
Lack of adequate cash flow for…
  • Growth
  • Operating expenses
  • Retirement
  • Estate taxes
Ownership issues such as…
  • No buy-sell agreement
  • No price, valuation formula or funding for buy-sell agreements
  • Lack of adequate information concerning ownership responsibilities
Family reluctance to establish and implement.
  • A transition plan for the leadership of the company
  • A strategic plan for the direction of the business
  • An estate plan for the transfer of the ownership of the business
  • A family plan, or family governance structure, that supports and reflects the other plans


  Everything hinges on having a plan, or more specifically:
  • A transition plan for the leadership of the company
  • A strategic plan for the direction of the business
  • An estate plan for the transfer of the ownership of the business
  • A family plan, or family governance structure, that supports and reflects the other plans


  To generate profits and remain successful.



  To nurture, love and protect family members and to help each person to become a secure, self-sufficient and contributing member of society.



  To help you ensure that these values are not mutually exclusive.


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